from which source of tax revenue does most federal funding come? course hero

Income taxes paid by individuals make up the federal government's single largest revenue source. The income tax system is designed to be progressive, which means the wealthy are meant to pay a larger percentage of their earnings than middle- or low-income earners.

Full Answer

What is the Federal Reserve?

The Federal Reserve Act of 1913 established the Federal Reserve System (the Fed) as the central bank for the United States. The Fed works closely with the Department of the Treasury, which manages the finances of the federal government.

What does the Fed do?

The Fed issues Treasury securities and conducts auctions of these securities to raise funds for the federal government. In addition, the Fed also processes monetary transactions on behalf of Treasury, including issuing payments and other government receivables.

How many trust funds does Social Security have?

Funds are collected from your paycheck, and in most cases matched by your employer, then divided into the various trust fund accounts. Social Security has two trust fund accounts: the Old Age and Survivors Insurance Trust Fund (OASI) and the Disability Trust Fund (DI).

What is the role of the Fed?

The role of the Fed is to support the economy, not to make a profit. Once the Fed pays its expenses, any remaining profits are sent to Treasury to be used by the federal government.

What is Medicare Part A?

Medicare also has two accounts: the Hospital Insurance Trust Fund (HI), also known as Medicare Part A, and the Supplementary Medicare Insurance Trust Fund (SMI). These funds pay for hospital, home health, skilled nursing, and hospice care for the elderly and disabled.